Correlation Between ADRIATIC METALS and AECOM

Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and AECOM at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ADRIATIC METALS and AECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and AECOM, you can compare the effects of market volatilities on ADRIATIC METALS and AECOM and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ADRIATIC METALS with a short position of AECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and AECOM.

Diversification Opportunities for ADRIATIC METALS and AECOM

-0.18

Correlation Coefficient

ADRIATIC METALS  AECOM

Good diversification

The 3 months correlation between ADRIATIC and AECOM is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and AECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECOM and ADRIATIC METALS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ADRIATIC METALS LS 013355 are associated (or correlated) with AECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECOM has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and AECOM go up and down completely randomly.

Pair Corralation between ADRIATIC METALS and AECOM

Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to under-perform the AECOM. In addition to that, ADRIATIC METALS is 1.35 times more volatile than AECOM. It trades about -0.01 of its total potential returns per unit of risk. AECOM is currently generating about 0.07 per unit of volatility. If you would invest  9,725  in AECOM on October 23, 2024 and sell it today you would earn a total of  775.00  from holding AECOM or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ADRIATIC METALS LS 013355  vs.  AECOM

ADRIATIC METALS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADRIATIC METALS LS 013355 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ADRIATIC METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AECOM

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AECOM may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ADRIATIC METALS and AECOM

The main advantage of trading using opposite ADRIATIC METALS and AECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, AECOM can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AECOM will offset losses from the drop in AECOM's long position.

The idea behind ADRIATIC METALS LS 013355 and AECOM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.